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Dice up the bacon into small squares.
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Saute the bacon on medium-low heat, for about 10 minutes, stirring occasionally.
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When it's nice and crisp, remove the bacon bits from the pan and drain them on a paper towel. Reserve 1 tablespoon of the bacon drippings.
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Wipe out the pan you cooked the bacon in, then add the reserved bacon drippings, and heat the pan to medium heat.
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Add the peppers, onions and chili powder, and stir to combine.
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Saute the veggies for 5-7 minutes, until tender but not browned.
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Remove the veggies from the pan and set them aside to cool slightly.
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Now, preheat your oven to 400 degrees F.
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In an oven proof dish (I use a 9 inch by 9 inch baking dish), add 1/2 of the cheese, half of the peppers, and half of the bacon.
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Repeat, by creating a 2nd layer with the rest of the ingredients.
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Cover the dish with aluminum foil, then bake the dish for 10-12 minutes, until the cheese is just melted. Make sure you don't overcook it, or the cheese won't be as gooey.
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Garnish the hot dip with sliced jalapenos and chopped cilantro.
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Serve with tortilla chips.